White House economic adviser Kevin Hassett speaks next to U.S. President Donald Trump in the Oval Office of the White House in Washington, D.C., U.S., March 7, 2025.
Leah Millis | Reuters
President Donald Trump will tap his top economic advisor Kevin Hassett to be the next Federal Reserve chair, according to respondents to a special Jackson Hole Edition of the CNBC Fed Survey. But when asked who the president should pick, Hassett ranked a more distant fourth.
Hassett, the director of the National Economic Council, firmly led the pack when asked who the president will choose from among 11 names currently being considered. He was followed by Fed Governor Christopher Waller and former Fed Governor Kevin Warsh.
But when asked who the president “should” pick, Warsh took the No. 1 spot, closely followed by Waller and former St. Louis Fed President James Bullard. Fed Vice Chair for Supervision Michelle Bowman was in fifth after Hassett.
“I think that Trump’s familiarity with (Hassett) in the job that he did during the pandemic makes him a high candidate for Trump, who appreciates and awards loyalty,” said Richard Steinberg, senior global market strategist with Focus Partners Wealth.
While maintaining that Hassett is qualified, Allen Sinai of Decision Economics said he’s concerned about Fed independence if he gets the job.
“The politics of low interest rates for political reasons — a very strong view and push by the Trump administration — is a macro risk if it is seen in markets as a takeover by the administration,” Sinai said.
In the survey, 41% of respondents think the next Fed chair will conduct monetary policy independently of the president and 37% said it would be in coordination; 22% were unsure.
Trump has campaigned hard for the Fed to cut rates, repeatedly insulting current Chair Jerome Powell, but Powell and the Federal Open Market Committee have so far resisted because of concern over potential inflation from tariffs.
Bowman and Waller both dissented in July in favor of a rate cut.
Survey respondents see two rate reductions this year from the Fed — in September and December — but also high inflation.
The forecast for the consumer price index 12-month inflation rate remains at around 3% this year and 2.9% in 2026, suggesting the Fed will have to deal with above-target inflation for a while. Nearly two-thirds of respondents believe “substantial” impacts from tariffs on inflation are yet to come.
“The Fed is caught between a rock and two hard places,” said Richard Bernstein, CEO of Richard Bernstein Advisors. “Political pressure to cut rates and fiscal stimulus coming vs. the ongoing strength in the leading indicators of employment and inflation.”
As a result, Powell may not be as dovish about rate cuts as markets hope in his Jackson Hole, Wyoming, speech. The Fed gathers each August for a symposium at which there are no votes but the chair traditionally delivers a keynote speech that often has indicated what’s ahead.
Almost 70% of respondents think the Fed chair will be neutral in his comments with 14% believing he will be dovish. Another 14% think he won’t even discuss monetary policy or the economic outlook.
“Powell’s comments at Jackson Hole may be more balanced than the market is currently anticipating as he needs to weigh both downside risks to employment and upside risks to inflation,” said Douglas Gordon, managing director at Russell Investments.
Powell could discuss the Fed’s effort to revisit its long-term strategy, with some expectation he addresses the Fed’s controversial average inflation targeting.
Respondents are divided over how to fix the central bank or whether it needs fixing at all. Just 11% say the Fed process of making monetary policy needs major reforms with 85% saying it needs either modest or little to no reform.
On specific issues, a 41% plurality say the Fed should get rid of the dot plot where central bank officials anonymously indicate individual forecasts for the funds rate. But 37% say keep it as is, with another 19% saying it should be kept with individual forecasts linked to the rate outlook.
When it comes to the 2% inflation target, 52% want to retain it but 44% want the Fed to adopt a range from about 1.4% to 2.7%.
A 44% plurality want to eliminate the Fed’s average inflation targeting, while 37% want to keep it.
In average inflation targeting, the Fed takes into consideration prior misses in hitting its target, and could tolerate higher inflation for a while to account for inflation having run below target in previous years. Some have said this led the Fed to be more tolerant of inflation during the pandemic and slowed its decision to tighten policy.